Crafting an industry: Q&A with California cannabis czar Lori Ajax

Lori Ajax has what may be one of the most influential governmental positions in the legal marijuana industry – chief of California’s Bureau of Medical Cannabis Regulation.

As such, Ajax will help craft rules for what will be the nation’s largest regulated medical and recreational cannabis markets.

The agency she heads will be renamed the Bureau of Marijuana Control, pursuant to a provision in the ballot initiative (Proposition 64) California voters approved in November that legalized adult-use cannabis. But that, along with many other regulatory and industry changes, are still to come in 2017.

Marijuana Business Daily spoke with Ajax to see how everything is shaping up for California’s marijuana industry – and how the Trump administration might affect it.

How are things going for your agency in general? What are you working on?

We’ve done a lot of public outreach with listening tours and pre-regulation meetings. We went to 17 locations across the state, talking with people, getting feedback.

We’re going to be proposing regulations for medical somewhere in early April. In California, once you propose your regs, it starts a 45-day period for the public to make comments, and then we’ll be responding to those.

If we make any changes, we’ll go out for another comment period. So we’re doing that right now with the medical, and we’re also simultaneously working on our Prop 64 regulations. But a lot of what we did for the medical regulations we’ll use for the adult-use regulations.

Right now, there’s a lot of bills out there (an estimated 39 had been introduced in the California Legislature as of Feb. 20), and we do have the authority to use what’s called emergency regulations, which we plan to use.

There’s a desire to align the two models, so we don’t have separate systems for medical and adult use when it comes to the licensing process.

We know there are going to be some changes in this legislative session, so once we have a clearer idea of what those changes are going to be, we’ll probably have to use some of our emergency rulemaking authority for some of the adult-use regulations so we can get them all done by the end of this year.

(The bills) range from dealing with taking cash at different locations across the state to dealing with advertising and edibles.

Do you have any idea if the legislature will establish a banking system so California cannabis companies won’t have to pay state taxes or fees in cash?

That’s a big concern for all of us here in California, the fact that the industry relies heavily on using cash. From a regulator’s point of view, that makes things problematic.

But fortunately, State Treasurer John Chiang a few months ago started a cannabis working group with other state agencies and industry members and local jurisdictions. He’s looking at ways that perhaps he can resolve some of those issues.

Do you believe the state will start issuing MJ business permits in January, or do you think that may be delayed?

It is in statute under Prop 64 that we have to begin issuing licenses on Jan. 1, 2018. We’re on track to make that deadline.

That doesn’t mean we can issue everyone a license on Day One. That’s not going to happen. But we do have the authority to issue temporary licenses, so we’re looking at how we best can meet our statutory mandate but still have responsible licensing.

A lot of the hard work is that transition – bringing people from the unregulated market to the regulated market, and what that transition looks like.

We have mandatory testing for all cannabis, for example, so we’re thinking about, once we license a dispensary, what happens to the product that’s currently on the shelf that hasn’t been tested? What do we do with that?

Do you have any expectation in terms of how many business license applications you may receive in the run-up to January?

It’s not an easy task to figure out how many applications we’re going to have. But we estimated we may have about 11,500 applications. There’s no way to really know, and a lot depends on the local jurisdictions because (businesses) do have to have approval from local governments.

Any words of advice on how California businesses can prepare for the regulatory implementation next year?

Look at our proposed regulations when they come out, make sure people are reading them and commenting on them.

We may be changing them (based on feedback) on how to maybe better structure our regulations for business. We really do need that feedback.

And reach out to local jurisdictions and make sure they have that ready to go, too, because if businesses are not in compliance with local (ordinances), then we’re not going to be able to issue a license to them.

We can’t predict what’s going to happen at the federal level, and obviously we don’t control that part of it. So the bureau is focused on what is under our jurisdiction, which is putting together the state regulatory framework for recreational and medicinal cannabis.

That’s what we’re concentrating on. We have very little time, so we have to be very strategic with how we use our time.

So it sounds like California is moving ahead as planned.

Yes. Obviously, we’re aware of what’s being said, but we still have to focus on what we need to get done by the end of this year.

We’re still going under the federal guidance that we have under the Cole Memo. That’s still in place, until such time as we get a different directive from the federal government.